Home » Insolvency for a UK Company

1. What are insolvency proceedings?

These are measures taken to deal with company debt. There are many different types of company insolvency proceedings.

2. Do insolvency proceedings apply to all  companies?

Compulsory winding-up and receivers (including administrative receivers) apply to registered and unregistered companies (including oversea companies).

It Does not apply to unregistered companies, which cannot be wound up by these methods.

If the liquidation or receivership began before 29 December 1986, then the law in force at that time will continue to apply.

Not all companies in liquidation are insolvent.

3. Do all Businesses have to go through insolvency proceedings before being dissolved?

No. If the Registrar has reason to believe that a company is not carrying on business operation, he may strike its name off the register and dissolve it without liquidation. A private company that is not trading may apply to be struck off the register.

4. Can anyone supervise insolvency ?

All liquidators, administrators, administrative receivers and supervisors taking office on or after 29 December 1986 must be authorised insolvency practitioners.

Receiver managers and Law of Property Act (LPA) receivers do not have to be authorised.

5. What happens to the directors of an insolvent company?

The liquidator, administrative receiver, administrator or Official Receiver has a duty to send the Secretary of State a report on the conduct of all directors who were in office in the last 3 years of the company's trading. The Secretary of State has the power to decide whether it is in the public interest to seek a disqualification against a director.

Examples are:

• continuing the company's trading when the company was insolvent;
• failing to keep proper accounting records;
• failing to prepare and file accounts or make returns to Companies House; and
• failing to send in returns or pay to the Crown any tax that is due.